THE FEDERATION of Petroleum Suppliers is concerned that the freeze on road fuel and rebated fuel duty announced in the government‘s new budget masks continuing penalisation of red diesel users.

The FPS said it applauded the decision to defer duty rises and to maintain the duty differential between road fuels and rebated fuels.

But it pointed out that the 1.22p per litre duty rise due to come into effect on 1 September will amount to a 53% increase in red diesel duty in under 12 months.

The increase will come on top of substantial increases in the price of oil, which have already taken red diesel prices to their highest levels since the Yom Kippur war, over 25 years ago, the FPS said.

Susan Hancock, FPS chief executive, said: “The increased crude oil prices have already provided the Treasury with unexpected additional revenue from the North Sea.”

“These high crude prices have also increased prices of red diesel to end users, to the point where it will affect the economy of rural communities and niche industry markets that use the fuel.”

“In terms of the government‘s pollution reduction targets, red diesel consumption is insignificant compared with road fuels and so has minimal overall environmental impact. 

“The increase is just another blow to those users who have no access to natural gas,” Ms Hancock said.